Securities trading system

ABSTRACT

A securities trading program for trading individual lots of a security which can be run at a security trader&#39;s computer station. The program generates a trading screen comprising a listing of multiple bids for the security, each bid having a price, as well as a listing of multiple priced offers for the security. The bid and offer listings are active, enabling the trader to hit any one of the displayed bids or take any one of the displayed offers, for example by selecting and clicking on a displayed bid or offer. In one embodiment, the bids and offers are arranged in side-by-side columns on the trader&#39;s screen, helping the trader to rapidly overview the market for a particular security, and compare different, possibly competitive, securities by paging through level-of-interest windows for each security. The invention&#39;s easily manipulated insights into market dynamics offers a sophisticated trader new opportunities to profitably exploit market niches, for example by browsing for attractive bids or offers on closely comparable securities.

BACKGROUND

This application claims the benefit of provisional application No.60/294,851 filed May 31, 2001, and U.S. application Ser. No. 10/150,476,filed May 17, 2002, now issued as U.S. Pat. No. 8,015,097, bothincorporated by reference.

The present invention relates to a securities trading system comprisingcomputer-implementable program software intended for implementation withsupporting hardware. It relates to a securities trading system whichenables securities traders, or other users, to make and hit bids and tomake and take offers for purchase or sale of securities, especially, butwithout limitation, bonds or other fixed income securities.

More particularly, the invention relates to such a securities tradingsystem which is suitable for deployment on the Internet, or anequivalent wide area network to enable a multiplicity of users locatedremotely from one another to effectively create and transact trades inU.S. government, municipal, corporate or other bonds or other fixedincome securities or instruments. It is also contemplated that theinvention may be applicable to trading in fixed income futures andderivatives as well as to trading in stocks and stock futures andderivatives, albeit with suitable adaptations of conventional practicesas will be apparent to those skilled in the art.

In recent years, many systems have been proposed and employed tofacilitate electronic trading in valuable financial securities.Nevertheless, even in the year 2001, available electronic systems failto provide a trader with adequate functionality to enable him or her tofully realize the potential of electronic commerce.

The invention relates particularly to an improved system for tradingsecurities especially fixed income securities, such as treasury,municipal or corporate bonds, in real time, or near real time, employingelectronically linked user stations, which system provides an individualtrader with enhanced functionality enhancing the trader's performance.The user stations are equipped for data processing, being, for example,computerized. The Internet provides one suitable medium for linking theuser stations and preferred embodiments of the invention are adapted foruse with the Internet. Use of the invention with other communicationsmedia suitable for linking users stations, such as local area networks,intranets or other wide area networks or modifications or subsets willbe apparent to those of ordinary skill in the art.

Financial securities, for example stocks and bonds, oil, grain and othercommodities, as well as many other products as diverse as livestock andfine art, have long been traded by means of what is known as an “openoutcry auction.” Typically, buyers and sellers assemble at a locationwhere they present bids or offers to the assembled group, via simplevocal bids and offerings, a process sometimes known as a “bid-ask” or“ask-bid” system. In many cases, the presentations are made by a brokeracting on behalf of client buyers or sellers. In some instancesprofessional brokers may be required, especially for specializedvaluable commodities such as financial securities. Open outcry auctionslie at the heart of traditional exchanges, where they may provide auseful price determining mechanism. While open outcry auctions haveprovided an effective marketplace for many different products, they canbe expensive and inconvenient. Furthermore, open outcry auctions havelimited capacity and become increasingly error-prone as trading volumesincrease.

Another drawback of the open outcry auction system of market making is alack of price transparency, in that participating traders may know onlythe tip of the iceberg of the book of unfilled orders, namely the onesthat are vocalized. There is no way for a trader to see or execute onother levels of interest in the market than those that are vocalized.

An important class of fixed income securities are those issued by theUnited States Government, which are known as U.S. treasuries. There arethree different types of U.S. treasuries having different maturity termsat issue, namely, Treasury bills having maturities of 13 to 52 weeks,Treasury notes or “MTNs” (medium term notes) having maturities of one toten years, and Treasury bonds having maturities of up to 30 years.Treasury bills, being short term instruments, are pure discountsecurities having no coupons whereas notes and bonds, having longerterms, have a defined payment cycle of semi-annual interest payments tothe holder. The interest rate is known as the “coupon”, which term isderived from a detachable paper portion which was found on older, paper,bearer bonds.

Advantages of Treasuries to investors include their low and uniformdefault risk, attributable to their backing by the full faith and creditof the U.S. government, and their liquidity. Market pricing reflectsthese benefits.

New Treasury securities issue with a face or “par” value, for example$10,000,000.00, an interest rate or “coupon” payable, for example 5.500percent and a maturity date, for example Feb. 22, 2011. Such a noteconstitutes a promise by the issuer, the United States government, topay the par value on the maturity date. Treasury bills are auctioned bythe U.S. government on preestablished auction dates and the auctionprices define the issuance yields of the security. After the auction,the Treasuries enter the secondary market and are traded typically “overthe counter”, i.e., without a defined exchange. As inflationexpectations, supply and demand and other conditions change, so theprices Treasuries fluctuate on the secondary market. These new pricesare reflected by competing bid and ask prices communicated amonginstitutions, banks, brokers, and dealers in the secondary market usingelectronic notification systems such as DOW JONES (trademark), TELERATE(trademark) and BLOOMBERG (trademark). The yield of a fixed incomesecurity, such as a Treasury note increases as its price drops in themarket, typically reflecting an overall increase in the interest ratesfor that term of security.

Newly auctioned Treasuries, and other fixed income securities, aretraded alongside securities issued in earlier auctions, with the morerecently issued securities usually being more active in the market,which is to say traded more often than older securities. Some oldersecurities are infrequently traded, and suffer an illiquid market thatmay or may not reflect the current, market-determined interest rate fora security of that maturity.

Similar considerations apply to securities from other issuers includingother governments, municipalities and utilities as well as commercialentities such as corporations. However, United States Treasuries, byvirtue of their security and volume, occupy their own unique, anddominant, position as the most liquid securities in the market. Otherbond issuers must pay higher yields to compensate for the market's lowerconfidence in the issuer's ability to pay, and lower liquidity.Furthermore, other bonds and notes are issued less frequently, insmaller volumes and in fewer denominations. In most cases, emphaticallyless frequently, smaller and fewer.

There is a need for effective electronic systems for facilitatingtrading in fixed income and other securities which systems can providethe market-making benefits of the outcry auction, yet which canaccommodate high trading volumes with a low error rate and provideenhanced opportunities to brokers or other participant traders to maketrades or deals. A number of electronic bond trading systems are knownto the art.

In my U.S. Pat. No. 5,915,209, the disclosure of which is herebyincorporated herein by reference thereto, there is disclosed acomputer-implemented bond trading system providing a private electronicauction enabling a trader to conduct a private auction to find andtransact with a high bidder for, or low offerer of, a bond lot such as amunicipal or other fixed income security lot. The auction can beconducted anonymously between remotely located brokers and dealers,across a wide area network, for example the Internet, so that only thetrader conducting the auction sees the levels of interest expressed inthe bids or offers for the bond lot. It would be desirable to have atrading system providing additional options to the trader.

Harrington et al. U.S. Pat. No. 6,161,099 teaches a method of conductingmunicipal bond auctions over the Internet wherein a bidder communicateswith a bond issuer's computer to compute interest cost values specifyinga borrowing cost, and to transmit bids to the issuer. Harrington et al.addresses the primary market wherein bonds are brought to market, and isof no help to traders seeking additional electronic trading options inthe secondary market where bonds are traded after issue.

SUMMARY

The present invention solves the problem of providing a bond tradingprogram which provides a trader user of the program added tradingfunctionality. In general, in a first aspect, the invention features acomputer-implementable fixed income security trading program foreffecting sales of one or more lots of a fixed income security, theprogram having an active trading screen comprising, on a single screen:

a) a listing of multiple bids for the fixed income security; and

b) a listing of multiple offers for the fixed income security.

The novel screen display provided by the invention enables a trader toexecute transactions in a novel manner, for example by hitting multiplebids, or taking multiple offers in a single transaction.

In general, in a second aspect, the invention features a securitiestrading program for trading individual lots of a security, the tradingprogram being implemented at, and operable from, a security trader'scomputer station and having a trading screen comprising:

a) a listing of multiple priced bids for the security; and

b) a listing of multiple priced offers for the security; wherein the bidand offer listings are active enabling the trader to hit any one of thedisplayed bids or take any one of the displayed offers.

In general, in a third aspect, the invention features a computerizedmethod of trading financial securities between multiple securitiestraders, each employing a trading program resident at a computerstation, the computer stations being communicable with each other forthe mutual exchange of program data, the method comprising an individualtrader's carrying out the following method elements:

a) receiving an order to buy or sell a security lot from a client;

b) viewing multiple displayed bids and offers for the security;

c) deciding on the basis of the viewed bids and offers whether to be anaggressor or to enter the market on the passive side; and

d) either executing on or successfully negotiating with a displayed bidor offer or posting a new bid or offer.

In general, in a fourth aspect, the invention features a computerizedmethod of trading financial securities between multiple securitiestraders, each employing a trading program resident at a computerstation, the computer stations being communicable with each other forthe mutual exchange of program data, the method comprising an individualtrader's carrying out the following method elements:

a) receiving an order to buy or sell a security lot from a client;

b) viewing multiple displayed bids and offers for the security;

c) selecting any one of the displayed bids or offers; and

d) transacting a system-executed sale with the selected bid or offer.

Embodiments of the invention may include one or more of the followingfeatures. A trader may execute on multiple lots, show the public marketa bid or offer which is less than their total order, spread a trade toanother instrument and to obtain price improvement from a new bid oroffer. The security traded may be a fixed income security. The securitytraded may be a United States treasury bill, note or bond, a municipalbond or a corporate bond. Each bid or offer in the listings may beresponsive to user input to initiate a computer-effected tradeexecution. The user input may include interacting with the displayed bidor offer with a computer pointing device. The bid and offer listings maybe displayed in side-by-side vertical lists. The bid and offer listingsmay be displayed with the bids in order of descending bid value and theoffers in ascending order of offer value and wherein the highest bid isaligned with or adjacent to the lowest offer. The bid and offer listingsmay be displayed in side-by-side vertical lists and wherein the bid andoffer listings are displayed with the bids in order of descending bidvalue and the offers in ascending order of offer value and wherein thehighest bid is aligned with or adjacent to the lowest offer. The parvalue of each bid or offer may be displayed adjacent the bid or offerprice. The bid and offer listings may include all bids and offers knownto the system. The bid and offer listings may be displayed inside-by-side vertical lists, with the bid and offer listings displayedwith the bids in order of descending bid value and the offers inascending order of offer value. The highest bid may be aligned with oradjacent to the lowest offer. The par value of each bid or offer may bedisplayed adjacent the bid or offer price. The bid and offer listingsmay include all bids and offers known to the system. The system maydisplay a partial amount for a bid or offer In response to a hit or atake, the system may execute a transaction procedure to sell thesecurity lot. The system may interface with a security tradeadministration system to provide straight-through processing of salestickets. Each bid and offer listed may be electronically active wherebythe system can respond to activation of the screen area occupied by abid or offer. A trader may execute a system-effected transaction withany displayed bid or offer. The system may provide a spread to functionenabling a trader to link the price of a bid or offer to the changingmarket price of another security, whereby the bid or offer price issystem changed in a trader-determined relationship to the price of theother security. The trading program may provide a switch functionenabling a trader to simultaneously buy one security and sell another.The program may provide a negotiation function enabling a trader tonegotiate with a displayed bid or offer, or with any displayed bid oroffer. The trading program may enable a trader to post a bid or offer tothe system for viewing and transacting upon by other traders regardlessof the chronology of pre-existing bids and offers.

The above advantages and features are of representative embodimentsonly, and are presented only to assist in understanding the invention.They are not to be considered limitations on the invention as defined bythe claims. Additional features and advantages of embodiments of theinvention will become apparent in the following description, from thedrawings, and from the claims.

DESCRIPTION OF THE DRAWINGS

FIG. 1 shows a level-of-interest window on a given security, listingprices and lot sizes of a given security, much like a specialist's“book” in a conventional stock exchange, which level-of-interest windowis available in a bond trading program, the program being implemented ata user's computer station;

FIG. 2 shows a pop-up window for managing the levels-of-interest shownin the window of FIG. 1;

FIG. 3 shows a trade creation window, pursuant to an element of the bondtrading program illustrated in FIG. 1;

FIG. 4 shows a price improvement window, pursuant to an optional elementof the bond trading program illustrated in FIG. 1;

FIG. 5 shows a spread window for spreading a transaction to anotherinstrument, pursuant to another optional element of the bond tradingprogram illustrated in FIG. 1;

FIG. 6 shows a swap, or switch window for simultaneously executing a buyand a sell of different instruments, being another optional element ofthe bond trading program illustrated in FIG. 1;

FIG. 7 is a schematic block diagram showing one possible implementationof the bond trading program illustrated in FIG. 1, in a systemcomprising multiple remotely connected users;

FIG. 8 is a schematic block flow diagram of the bond trading programillustrated in FIGS. 1-7; and

FIG. 9 is a screen of a modified or alternative security tradingprogram.

DESCRIPTION

Referring to FIGS. 1-3, a computer-implemented bond trading programaccording to the invention, intended for use by professional securitiestraders, who may be brokers acting on behalf of a client, or dealersacting on their own account, comprises, in addition to customary dataentry, storage, reporting and management screens, similar for example tothose described in my parent U.S. Pat. No. 5,915,209, alevel-of-interest window 10.

Level-of-interest window 10 shown comprises, on its left-hand side abid-listing pane 12 and, on its right hand side, an offer-listing pane14. The top of level-of-interest window 10 bears a title bar 16displaying the descriptive particulars of a selected bond or bondcategory, the subject security, in this case a 5-year U.S. TreasuryNote. As noted in title bar 16, the note matures on May 31, 2005 and hasa coupon of 5.500 percent which is to say the rate of interest, based onpar value. The note is designated “ON-THE RUN” meaning that the securityis the current, or latest, issue for the maturity stated.

The system is applicable to trading in other fixed income securitiesincluding all types of United States treasury bills, notes or bonds,municipal bonds and corporate bonds. Some of its benefits may also beapplicable to the trading of commodities, corporate stocks, mutualstocks, futures and derivatives of the foregoing, as will be apparent tothose skilled in the art.

The user station is electronically linked, for example, via theInternet, to retrieve trading data whereby level-of-interest window 10can be refreshed to display updated data in real time or with a slightdelay.

“Real time” is used in a conventional sense herein and should beunderstood to suggest immediacy, subject to normal electronic processingdelays and interruptions. Whether or not a user experiences asignificant delay before receiving information or a response in what theinvention contemplates as real time may depend upon the capabilities ofthe user's system the server system and any intervening network, or theefficiency of an external data source.

As will be explained in more detail below, panes 12 and 14 anonymouslylist information regarding the current market for the selected securitywhich information comprises a number of active bids and offers,preferably all the active bids and offers known to the system regardingthe selected security, a full listing. In a desirable embodiment of theinvention, all trades, or all trades in a geographical area or otherlogical category are conducted employing the bond trading system of theinvention and In a preferred embodiment of the inventive bond tradingsystem, information regarding the bidding or offering trader or owner isnot made available, until after a trade has been transacted and thebought and sold tickets are cut.

Beneath title bar 16 appear four rows 18, 20, 22 and 24 of screencontrols. The various screen controls shown are divided into two groups:bid-related controls on the left, located above bid-listing pane 12; andoffer-related controls on the right, located above offer-listing pane14. Thus, beneath title bar 16, level-of-interest window 10 has abidding side on the left and an offering side on the right, enabling theuser to view bids and offers side-by-side, on a real time basis, in aconvenient and beneficial manner not heretofore provided in acomputerized system. Furthermore, in a preferred embodiment, the systemenables a trader to execute a transaction with any displayed bid oroffer, as will be explained in more detail hereinbelow.

The controls in row 18 determine the nature of the transaction thesystem will execute when actuated and comprise two pairs of “either/or”radio buttons, 26-28 and 30-32. When radio button 26, “This Bid”, on thefar left, is selected, e.g. by a mouse or other screen-pointing device,the system will execute a hit only for the bid selected. Alternatively,adjacent radio button 28 “All Bids Higher” may be selected, in whichcase, the system will execute a hit for the selected bid and for allhigher bids displayed in bid-listing pane 12 at the moment of the hit.

Similarly, selecting radio button 30, “This Offering”, on the right,sets the system to execute a take of an offering on the selectedoffering only and selecting alternative, adjacent radio button 32, “AllOfferings Lower”, sets the system to execute a take for the selectedoffering and all lower offerings displayed in offer-listing pane 14, atthe moment of the take.

The particular value to the trader of this novel capability tosimultaneously execute on multiple bids or offerings in a selected pricebracket, will be apparent to those skilled in the art and will be morefully explained below.

Bids higher than a pre-existing and active offer, or offerings lowerthan a pre-existing bid are essentially improper and accordingly, noneis shown. Such bids or offers, if attempted, are labeled“off-the-market” and are preferably denied posting by the system.Optionally, a user attempting to enter such an order is given theopportunity to execute “on-the-market”, for example by adjusting theorder price. The system can suggest an adjusted order price. If desired,a log of such off-the-market bids and offers may be system-maintainedand made available to system administrators, or others on a restrictedaccess basis.

The controls in row 20 provide, on the left a Hit button 34 which can bepressed to transact a hit on the selected bid and, on the right, a Takebutton 36 enabling the user to take a selected offer. Optionally, thesystem can provide for multiple bids or offers to be selectedsimultaneously, for example by dragging a pointer or using the customarycontrol key, enabling multiple simultaneous hits or takes.

Box 38 to the right of hit button 34 prominently displays the amount,“99.097” of the bid being hit, and box 40 displays the lot size, “10”.Box 42 to the right of Take button 36 prominently displays the amount,“99.11” of the offer being taken, and box 44 displays the lot size,“10”. Boxes 38-44 clearly indicate to the user key data regarding theaction to be effected by pressing Hit button 34 or Take button 36, forconvenience, and to reduce the risk of error.

The controls in row 22 are passive, calculated data displays: display 46indicates the Average Price of all the trading units bid, on a price permillion basis; and display 48 indicates the Average Price of all thetrading units offered, on a price per million basis. The number oftrading units in each bid or offer is shown in the par columns,described below. Optionally, totals for the par values of all theoutstanding bids and offers, and/or the difference between the totals,can be shown.

The controls in row 24 comprise two depressable bars: lefthand bar 50“Negotiate With Bid” enables the user to submit a modified offer priceor lot size; and righthand bar 52 “Negotiate With Offer” enables theuser to submit a modified bid price or lot size. Preferably, such pricenegotiations are kept private, being displayed only to the counterparty,and possibly, the system operator.

Bars 50 and 52 can open new windows or programs wherein the user cansubmit an offer or bid different from any of the current bids or offers.For example, a trader-user seeking to buy 25 units (millions) of thesubject note might negotiate with offer number 2 in offer-listing pane14, by selecting the offer, pressing righthand bar 52 and entering a bidprice, e.g. 99.093, along with the lot size. The price is calculated toappeal to the offerer having regard to the displayed “board” of bids andoffers shown in FIG. 1, which is public and therefore also available tothe offerer. In this example, the price of 99.093 is significantlyhigher than bid number 3, which might be divided to take advantage ofoffer number 2, but less than bid number 2 which has too small a lotsize to take offer number 2.

It is probable that bid number 1 and offer number 1 will shortly go offthe screen, possibly after minor negotiation to reduce the spread, adeal having been made and a sale transacted between the two listings.However, commission payment practices may influence the market dynamics.The usual commission practice in the fixed income industry in the UnitedStates in 2001 is for the activator or “aggressor” to pay thecommission. This practice may lead to a standoff, neither party wantingto become the aggressor and incur commission costs. Thus, instead oftrading the parties may prefer to wait and see how the market developsand whether new levels appear on the bid side or the offer side. Thus,commission considerations provide one reason why the best offer may nottransact with the best bid. There can be others.

The price difference, or spread, between bid #1 and lot #1 which is onethirty-second and one eighth, $3,515.00 on lot of 10 m, at the displayedprices must include the trader's commission, which is paid by the activedeal maker, the trader who takes an offer or hits a bid. A typicalcommission on a U.S. Treasury deal is $30.065 per million par amount sothat the commission on $10 million would be $300.65.

Alternatively, pursuant to the invention the practice of aggressor payscan be abandoned in favor of a split commission where the system chargesboth sides a commission, usually, but not necessarily, the samecommission. In this event, the bid and offer prices will be the same. Itis contemplated that the system may significantly lower transactionexpenses through cost savings in professional personnel and support,enabling commission rates to be reduced and improving transactionefficiencies. Such productivity gains can be expected to improve marketdynamics and increase transaction volume.

Panes 12 and 14, labeled “Bid Depth” and “Offer Depth”, respectively, ina header row 53, comprise five columns each, referenced 54-72. Columns54-72 display data regarding various characteristics of a number of bidsor offers that are active in the system. The characteristics are labeledin a header row 55 which extends across the tops of columns 54-72.Columns 54 and 56 show the dollar price, in the case treasury note caseillustrated, to eight decimal places and increments of one-two hundredand fifty-sixth ( 1/256) of a dollar. Columns 58 and 60 number the bidsand offers, respectively in value order, descending for bids andascending for offers. Columns 62 and 64 indicate for how long the bid oroffer is good, in the example shown, “GTC”, “good-'till-canceled” orrevoked by the customer. The par value of the lot is shown in columns 66and 68. In the treasury note case shown the par value is shown intrading units of millions of dollars, as is the practice for governmentbonds. Similarly, the par value can display in thousands for corporateand municipal bonds, as is their practice. The bid and offer amounts areshown in columns 70 and 72. The prices bid in columns 54 and 70 areshown in descending order while the offer prices asked in columns 56 and72 are arranged in ascending order.

Columns 54-72 are arranged symmetrically in the middle oflevel-of-interest window 10, on either side of the border between panes12 and 14, enabling the bid and offer prices in columns 70-72 to beviewed side-by-side with the highest bid and lowest offer adjacent oneanother. This carefully organized screen display has a number ofadvantages and is of particular value to a busy trader working in ahectic market. The best prices are clearly apparent at the tops ofcolumns 70-72 and are easily compared with one another so that a usercan see the spread between the bid and offer, or ask price. Thenext-best prices are also close to this point of attention where theyare easily found and utilized. Other less close prices of lessinteresting bids and offers are ranked by their downward distance fromthe best prices, with bid prices descending and offer prices ascending.

Color coding or other graphic features can be employed, if desired, toemphasize these relationships and facilitate comprehension of the visualimage. For example, the top line might be in larger type or highlightedor presented on a yellow or orange background, being colors which drawthe eye. Descending colors could be yellow, then green then blue,suggesting distance from the top level, he level of greatest interest.All orders at the same price could be the same color, providing anotherarea of visual acuity.

It will be appreciated that other screen placement configurations may beadopted which produce the result of emphasizing the best bid and offerlevels, showing bids and offers side-by-side and making other bids andoffers easily available for a trader-user to act upon. While the displayof all levels known to the market on a single screen, or in a singlewindow, is preferred, alternative embodiments are contemplated. Forexample, the best bid and offer levels might be shown on a screen,provided with an option button for displaying other levels. Also, it iscontemplated that in an active market, there may be too many levels ofinterest to fit level-of-interest window 10, so that, at any givenmoment, not all levels of interest are displayed. In this case, the moreinteresting levels of interest can be automatically displayed and other,less interesting levels of interest can be made readily available byknown means, for example by vertical scrolling, as is commonly used forfile list displays.

This novel arrangement of bids and offers on a trader's screen, providedby the invention, facilitates comprehension of the market by the trader,and enables the trader to rapidly gain an overview of the market for aparticular security, and to easily compare different, possiblycompetitive, securities by paging through level-of-interest windows foreach using known paging means, for example by pressing “Next”,“Previous”, “Top” and “Bottom” buttons (not shown) or by opening a listwindow, or pop-up, or other comparable means. Such easily manipulatedinsights into market dynamics can give a sophisticated trader newopportunities to profitably exploit market niches, for example bybrowsing for attractive bids or offers on closely comparable securities.Alternatively, a trader may successfully predict that a surge inactivity for one security will shortly spill over into another slightlydifferent security whose activity appears to lag the market, bolsteredby knowledge of the interest level in that security.

Par value amounts for the bids and offers, in columns 66-68, whichindicate lot sizes, are carefully located closely adjacent the bid andoffer prices in columns 70-72 where they are most useful to the trader.Thus, the center of the screen is the high interest zone for the traderand may be graphically enhanced to draw the user's attention, by screenlines, illustrations, icons, coloring or the like. If desired a zoomfeature can be provided to expand a central zone containing informationof greatest interest.

The dollar prices, columns 54 and 56 are the decimal prices, bid orasked, in dollars, per one hundred dollars of par value, i.e. apercentage. These columns serve as a reference tool and are useful forarithmetical purposes.

The bid and offer prices, in columns 70 and 72, are percentages of parvalue so that all prices shown represent a small discount on par,presumably because prevailing market interest rates are slightly higherthan the illustrated note's coupon of 5.500 percent.

By tradition, the first two places of “decimals”, i.e. the first twofigures after the point, indicate the number of thirty-seconds ( 1/32)of a full point that are bid. A colon or dash may be used in place ofthe decimal point. Thus the first offer price, “99.11” is asking for aprice of 99 11/32 percent of par for the lot offered.

The third place after the point subdivides the thirty-seconds intoeighths so that the third place digit indicates the number of eighths ofa thirty-second (⅛ of 1/32) that is bid or offered, i.e. the number oftwo-hundred and fifty-sixths ( 1/256). By convention, a plus sign “+” isused instead of “4” to indicate an intermediate price of four-eighths orone-half of a thirty-second (½ of 1/32). Thus, the first bid price“99.097” is ninety-nine and nine thirty-seconds and seven eighths (999/32+ 7/256), i.e. one-eighth of a thirty-second short of ninety-nineand ten thirty seconds, “99.10”. The second bid price “99.09+” isninety-nine and nine-thirty-seconds and one half of a thirty-second.

Each horizontal entry in bid-listing pane 12 or offer-listing pane 14comprises a level of interest in the market for the subject security, inthis case a 5-year Treasury Note. The horizontal entries in bid-listingpane 12 are bids and those in offer-listing pane 14 are offers orofferings. Each bid or offer is a legal proposition by a qualifiedmarket participant which may be accepted by another qualified marketparticipant. Preferably also, each bid and offer is active on screen sothat a user may invoke a program routine employing the bid or offer bypointing, clicking, highlighting or otherwise selecting the bid oroffer. For example, the user may double-click on the bid or offer toopen a new window, e.g. a transaction window, or may right click andopen a menu of options including, for example, “Hit” or “Take”, asappropriate, “Negotiate”, “Modify” and so on.

Usually, it will be a rule of participation that each participant mustbe able to fulfill a bid or offer made within the specified tradingperiod, or with on-hand inventory or funds. Accordingly, it is preferredthat participants are qualified to avoid fulfillment problems and toexclude deceptive or dishonest participation, for example, the making ofbids or offers that a participant has no intention to fulfill, becausesuch activities may disrupt the market and the trading process.

Accordingly, a bid shown in bid-listing pane 12 may be “hit” by theuser's selecting the bid and pressing Hit button 34. The system thenenables, and executes, transaction wherein the user sells the bond lotdescribed in the bid to the bidder. Similarly, an offer shown inoffer-listing pane 14 may be taken, or “lifted”, to use a term oftenseen or heard in the art, by selecting the offer and pressing Takebutton 36. Preferably, when a bid or offer is hit or taken, the systempromptly locks out other participants from hitting or taking the bid oroffer and removes the respective bid or offer from the interest leveldisplays of all users, or marks it sold.

Optionally, level-of-interest window 10 may also show, or provide buttonaccess to one or more recent transactions for the security. If desired,the security's transaction history can be made available in a separatewindow or pane.

Bids or offers can be imported, for example by APIs (application-programinterfaces) or entered into the program by any desired method includingimport from other software programs or data sources via files receivedover common carriers, private lines or links, landlines, airwaves,satellite and so on. Preferably, however, bids and offers are postedinto a trading program module of the inventive bond trading system, toensure the bid and offer data is fully integrated into the system andcan be made available to other users immediately, or shortly afterposting. Suitable data entry screens and procedures are described withreference to FIGS. 1-8 of my U.S. Pat. No. 5,915,209.

In another embodiment of the invention, bids and offers are manuallyentered at the trader's station, or at a linked station in the trader'soffice, to the data entry system, employing data entry screens, fromcustomer sources such as phone calls, emails and faxes. Manual dataentry can be supplemented by electronically posting informationregarding the security which is retrieved from source databases, or lessdesirably, from other available databases. Such information ispreferably authenticated. A customer ID, or customer information, whichis maintained in private, and identifies the seller or the buyer to berecorded for the security can be included by selection from a list orthe like. Desirably, each new bid or offer is approved by an authorizedprofessional before posting to the system and release for publicdistribution. For additional security and audit purposes, an electronicsignature or other electronic imprint associated with the responsibletrader can be stamped on each bid and offer record and centrallyarchived by the system, if desired. Such authorization stamp would notbe publicly available. Known techniques such as public keyinfrastructure can be employed to facilitate security.

Although some enterprises may benefit from deploying the inventive bondtrading program or system in-house, it is preferred that the system bedeployed among a multiplicity of remotely located traders and that bidsand offers be received into the system from any such, duly qualifiedtraders wishing to participate and are system-presented to all otherusers to solicit hits or takes.

New bids and offers may be screened and organized in any desired manner.Preferably, new bids are electronically screened for authenticity, forexample by identifying their source as being from an authorized programuser. Public key-private key infrastructure (“PKI”) can be used for thispurpose. In one example of how such a security system might work, traderstations, or other authorized users, communicate all new bids, offers orother listings to an administrator station in an encoded form lockedwith a private key and accompanied by a public key. The private key isknown only to the administrator and the particular trader, beingcommunicated between them by means other than electronic filetransmission, e.g. regular hand-delivery mail. The public key identifiesthe user enabling the administrator to select the appropriate privatekey to unlock the encoded new bid or offer.

Preferably also, new bids and offers are promptly integrated withexisting bids and offers and the displays in bid-listing pane 12 andoffer-listing pane 14 are automatically refreshed to display the newbids and offers without user intervention. Optionally, level-of-interestwindow 10 can include a Refresh button, not shown to refresh the screento control the display of new bids and offers and remove traded andexpired bids and offers. Choice of these functions may be user-settable,if desired.

If desired, a user alert, such as a flashing or highlighting of a newbid or offer for the subject bond, with a limited duration of perhapsfive or ten seconds, can be provided to attract attention to newlyarrived bids and offers. Alternative means such as a ticker tapecrawling across the bottom or top of the screen can be provided todisplay to the user new bids and offers for all securities of interestto the trader, if desired. Optionally also, securities of interest maybe specified in a setup routine for the ticker tape or other display.Other variables such as the size and price ranges of orders of interestthat are newly bid or offered may also be set.

The traders or other users may be located locally, regionally,nationally or globally and their user stations may communicate via theInternet, other wide area network or by any other suitable means, aswill be apparent to those skilled in the art. Such network or othermeans preferably also includes security means to ensure that dataexchanged between users cannot be misused if intercepted. Alternatively,the inventive trading program or system can be deployed on a securenetwork which may, if desired, be a dedicated private-use orlimited-access network, having reduced risk of intrusion or datamisappropriation or corruption, for example a virtual private networkoverlaid on or supported by the Internet or the like. Such a networkcontrasts with the open-access general-purpose character of the Internetbut might be deployed over the Internet.

The ability to view multiple levels of interest in a security, forexample at least three and preferably five or more, or all availablelevels of interest, provides a number of advantages, to a prospectivebond seller or purchaser and particularly to a user trader interested inrapidly transacting deals at favorable prices for their clients. Theinvention can also provide additional benefits by permitting the viewingof multiple levels of interest on multiple securities. Such multipleviewing can be enabled by tiling, listing, windowing or other techniquesknown in the computer arts.

Preferably, the bond trading program provides one or more users with anability to view all the levels of interest expressed by systemparticipants. Toward the end of a dynamic efficient market it is alsopreferred to enlist as participants, as many people as possible thatwish to bid or offer on a particular security at a given time.

A particular advantage of the adjacent display on a single screen, orthe bringing to a single window, of multiple levels of interest in abond is the flexibility provided to a trader user including the abilityto transact on multiple lots and the ability to hit any bid or take anyoffer displayed, even if it is not the best price.

Thus, a trader-user may wish to hit multiple smaller bids to subdivide alarge offer or take multiple offers and combine them into a single lotto satisfy a client order which is larger than a single best price lot.For example, a trader with an order to sell 100 million of the subjectsecurity may satisfy this order by hitting bid #1 (10 m), bid #2 (15 m),bid #3 (50 m) and bid #5 (25 m), getting an average price slightly above99.09, which is significantly better than the only bid for 100 m, bid #6at 99.082. While the price would be substantially lower than otherofferings, a quick sale results, which may be the best strategy in whatappears to be a bear market, top-heavy on the offer side.

The speed with which it is expected that the invention will enablereasonable market orders to be satisfied is contemplated to give atrader new options and greater flexibility. Thus, a large parcel mayquickly be unloaded in smaller units, with skillful price adjustmentsthat avoid significantly impacting the market. Furthermore, because atrader can immediately see the impact on the market constituted by thegroup of actively participating traders, as new bids and offers areautomatically posted to level-of-interest window 10, the trader canadjust both price and timing in the best interests of his client, forexample by delaying release of additional lots of the parcel if themarket clearly responds to initial lot postings with a distinct negativeprice movement. Alternatively, more lots can be quickly released if themarket shows a clear appetite for the security at a price which isacceptable to the client.

An alternative strategy available to the trader, pursuant to theinvention, is to select bid #6 and press button 50 to open a negotiationwindow (not shown) and negotiate with the bidder for a 100 m lot. Theactual price offered in a negotiation will be influenced by prevailingcommission rates, but, by way of illustrative example of thecapabilities provided by the invention, the negotiating trader mightoffer 99.12, the same price as offer #4 for 111 m. The advantage to thesponsor of bid #6 is that they will not have to pay the commission: itwill be paid by the offering trader in the negotiation, as the activeparty. The new offer can be presented to the sponsor of bid #6 in anumber of ways, but is preferably directly, privately and anonymouslysystem-presented to the relevant trader for example by completion of anegotiation window which can entail entry of the offer price andpressing a “Send to Bidding trader” button. Negotiation with an offercan be effected in a corollary manner.

A trader with an order to purchase 60 m, an awkward amount, not largeenough to obtain price improvement, but too large to fill quickly, mighttake offers #s 1 and 2 only, regarding the price of 99.12 on offers #s3-5 as too high, and enter a new bid for the relatively small and easilyfilled balance of 15 m.

These strategies, enabled by the inventive bond trading program, are notpossible with systems which display only a single bid and offer pricelevel at any given time.

A further and significant benefit of the simultaneous active displayonscreen of both sides of the market, in depth, i.e. showing multiplelevels of bids and offers at various prices is the ability to gain anoverview of the state of the market for the bond in question. The totalnumber of levels of interest, in this case 17, is indicative of theliquidity of the bond, a small number of bids and offers suggesting thatthe bond may be hard to move and a large number indicating that it willbe easy to resell the bond or to augment a holding. Such considerationsprovide valuable additional information to the user which was notavailable prior to the invention and which may help a trader or otheruser make a more efficient decision to buy or sell the subject bond, ora competitive bond, having a more favorable level of interest. Thebalance between bids and offers is suggestive of the direction in whichthe price will move: if the lot value bid within a defined pricebracket, say one or two thirty-seconds, of the market clearing price,significantly exceeds the lot value of offers within a similar bracket,it may be inferred that the market in the particular security displayedwill rise and vice versa, that it will fall.

In the example shown, bid-listing pane 12 comprises a total of six bidshaving a total par value of $224,000,000.00 within a price bracket of15/8 thirty-secondths (subtracting the price bid for lot #6 from theprice bid for lot #1). The first ten lots in offer-listing pane 14 fallwithin the same price bracket of 15/8 thirty-secondths of the lowestoffer and have a total value of $186,000,000.00, which is asignificantly smaller number than the bid value total, suggesting thatthe price may rise unless a higher proportion of offers comes to themarket. This is an example of a simple analytical deduction which may bemade from the displayed levels of interest. The invention contemplatesthat other more sophisticated analyses may be made, as will be apparentto those skilled in the art.

Optionally, the program may display such helpful analytical resultsstatistically, if desired, either in an additional display box or boxesin level-of-interest window 10, or in a pop-up window, or the like. Forexample, the program may permit the user to select a price bracket andshow the total lot values bid and offered within that bracket; or toselect a total par value bid or offered and selectively display the mostfavorable selection of countering lots that are available, preferablyproviding a price bracket indicator or an average price or both.Alternatively, or additionally, the system may provide lot value totalsand average or bracket price information for the total level of interestavailable or displayed.

Thus, the ability to view multiple levels of interest provides a tradervaluable, real-time information, that was previously unavailableregarding liquidity and market direction, enabling more and moreprofitable trading decisions and transactions.

A further benefit to the trader, pursuant to the present invention, canbe obtained by providing an optional pop-up window, public level window73, as shown in FIG. 2 to control the level of interest a trader showswhen their bid or offer is displayed in level-of-interest window 10.Public level window 73 permits a user to show All, 1 m, 5 m, 10 m, 25 m,100 m or to enter any desired amount, e.g. 50 m, to show publicly.Showing more than an order is improper and attempts to do so willpreferably be system-rejected, assuming the system has knowledge of therelevant order. Preferably, the show level is displayed only so long asthe system is capable of executing on the larger, hidden amount, shouldthat larger order level be accepted by another user. The system shouldbe capable of doing this so long as an adequate order is present in thesystem. Public level window 73 can be activated from a bid or offerentry screen (not shown) and system-stored as a property of the bid oroffer.

Using public level window 73, a trader can show less than their entireinterest, thereby hiding the full extent of their interest. This featuremay enable a trader to obtain a better price for a large lot or orderthan would be possible if the entire bid or offer were published. Thepresence of the large bid or offer can often adversely affect themarket, causing levels to be withdrawn from the other side of the marketand repriced unfavorably.

The bond trading software of the invention preferably also includes aprocedure for transacting or executing a trade in response to a traderuser pressing Hit button 34 or Take button 36, which trade transactionprocedure can include a trade transaction window 74, such as is shown inFIG. 3. Preferably, when a trader accepts a bid or offer by activatingbutton 34 or 36, the system removes the level from level-of-interestwindow 10, verifies that the accepted level still exists and is live,which is to say it has not been canceled, withdrawn or expired. If it isnot still live, the trader is so notified and returned tolevel-of-interest window 10.

As shown in FIG. 3, trade transaction window 74 comprises a transactiontype display 76 indicating the nature of the trade, “Hit Bid” and a biddescription 78 which recapitulates the subject security and the biddetails. If these are correct and the trader wishes to proceed andconsummate the transaction they press OK button 80. The system thengenerates buy and sell tickets, forwards them to the appropriate partiesand removes the bid from public display. Preferably transactionhistories are system-maintained, with trader-related data, and madeavailable to the respective trader.

Alternatively, the bond trading system can forward the transactiondetails to a trade capture program, utilized by the trader or to thetrader's back office systems, for completion of the administrative partof the transaction. API's or other known means can provide a transparentinterface between systems, if necessary.

Completion of the trade is preferably effected with fully automatedsystems providing straight-through processing from the front office,where the trader operates, to the back office where the transaction isreconciled with the buyer's and seller's accounts, file histories andarchives are prepared and trade confirmations, or buy and sell tickets,are prepared and forwarded for settlement, possibly via electroniccommunication with the counterparty trader.

If the details are incorrect, or the trader no longer wishes to completethe transaction, they can press Cancel button 82.

Transaction of a taken offer can be effected in a corollary manner tohitting a bid, in which case transaction type display 76 will display“Take Offer”.

When the trader hits a bid, the system can prompt the hitting trader toprovide information as to the security lot, or lots, in the trader'sinventory, or the trader's customer's inventory that should be used tofulfill the order. Alternatively, the system may automatically check theappropriate inventory and suggest one or more lots that should be usedto fulfill the order, final determination or confirmation being made bythe trader. Similarly, the system can prompt for information as to theidentity of the purchaser and any other necessary information inresponse to a take of an offer. Alternatively, and additionally, ifdesired, the system can search through pending customer orders for amatch or close match and prompt for confirmation or changes.

If the system finds a pending offering for the security larger than thelot hit, the system can prompt for additional bids to hit. Similarly, ifthe system finds an order for a larger lot of the offered security thesystem can prompt for additional offers to take.

In a valuable optional feature of the invention, prior to executing thetrade, the system responds to activation of OK button 80 by invoking aprice improvement procedure which searches for any new bids or offersthat may have recently entered the system and have not yet beendisplayed to the accepting trader. The system checks the new bids oroffers for a better price which, if found with all other particularsidentical to the hit bid or taken offer, is system-accepted anddisplayed to the trader. The system functions on the premise that ahigher selling or lower buying price will automatically be acceptable. Atrader willing to sell at 99.10 will certainly be willing to sell at99.11.

However, as a user-settable option, if desired, a confirmation procedurecan be provided, for example in a window such as Price Improvementwindow 84 shown in FIG. 4. Price Improvement window 84 comprises a biddescription 86 which provides details of the type and nature of the newbid or offer. These may differ slightly from the hit bid or taken offer,for example with regard to lot size, or possibly, as a result of systemerror. The trader can accept the new bid, in which case the systemreturns to trade transaction window 74, FIG. 3 substituting the new bidfor the prior bid and redisplaying the prior bid for action inlevel-of-interest window 10. The trader again presses OK button 80 tocomplete the transaction. Again, the system checks for a better price,and if none is found, which is probable in view of the short timeinterval since the last check, completes the transaction as describedabove. If a still better price is found, Price Improvement window 84 isagain displayed and the procedure is repeated.

The novel price improvement procedure of the invention enables a traderto obtain a better price in a way which was not heretofore possible.Such price improvement may be of great value in a fast moving market.Up-to-the second price improvement where a transaction can be improvedafter acceptance of a level and prior to completion is believed to benew to the bond trading marketplace and is beneficial in creating a moreeven trading environment without use of an exchange.

If, for any reason, the trader does not wish to complete the transactionwith the new bid, for example, because the lot size or other parameterdoes not meet the trader's requirements they can press Ignore New Bidbutton 88 and complete the transaction with the prior bid. Priceimprovement of an accepted offer can be effected in a corollary mannerto that for a bid, in which case the term “bid” is replaced with theterm “offer” throughout Price Improvement window 84.

Another valuable optional feature of the inventive bond trading programis illustrated by spread window 92 shown in FIG. 5 which provides adynamic pricing option for bids and offers whereby the system canautomatically adjust the price of a bid or offer in response to atrader-specified market parameter available to the system whereby theprice bid or offered is changed without further trader interventionafter setup.

In one example of such a spread, the price of a bid or offer order for alow activity bond, such as one with only a few months to maturity, canbe linked to the price of a more frequently traded instrument such as a2 yr note. Preferably, the trader has the option to insert a spreadmargin indicating the relationship of the subject security's price tothe reference price, for example a yield difference, expressed in basispoints, each of which is one-hundredth of a percentage point (0.01%).

A header bar 94 in an upper pane 95 of spread window 92 identifies thetrader using the program. Immediately beneath header bar 94, line 96,the trader's last sale is described. Box 98 on the left below line 96has a number of descriptors and drop-down menus providing the trader arange of options, where the various alternatives and optional featuresof the invention that have been described herein may be accessed. Forexample, “System Order” under which the spread function is grouped,might be switched to “Client Order” or another category bringing up adifferent data entry screen; “Spread to” can be changed to “Swap for”(see FIG. 6) and other system functions; settlement may be switched toother than “regular”; and other categories may be changed as is apparentfrom the right-hand column of box 98. The price label in this case is“S” for swap.

Line 100 beneath box 98 gives the particulars of the security for whicha bid or offer is to be placed. In this case it has a maturity of March2002, three months from a hypothetical trading date of Jan. 1, 2002, acoupon of 6⅞ percent, a par bid price of 100.22 (one hundred dollars andtwenty-two thirty-secondths (100 22/32) of a dollar per one hundreddollars par value) and a par offer price of 100.233, a lot size of 100million, a bid price yield of 5.3546% and an offer price yield 0.1555%lower. The bond was down on the last trade with par 23 bid.

Lower pane 102 lists possible target securities for price linking, oneof which can be selected and displayed in spread entry box 104 where thedetails may be adjusted and the trader can decide to enter or not enterthe spread. As shown, the price of the March 2002 bond is going to bespread to the 2 yr instrument maturing in June 2003, for the full amountof 25 pieces of 1 m, i.e. $25,000,000.00 par value, with a spread of 10,i.e. ten basis points, one tenth of a percent. Once entered, a new bidfor 25 million of the March 2002 bond is posted and made available toall system users. As sales of the liquid June 2003 bond are made, thepublicly displayed bid price of the March 2002 bond is changed toreflect the change in the June 2003 bond price. The spread to functionenables a trader to keep a bid (or offer) for an inactive security inline with the market price of a liquid, frequently traded security.

A still further valuable optional feature of the inventive bond tradingprogram is illustrated by swap window 106 illustrated in FIG. 6. A swapenables the trader to take advantage of a compatible bid and offer bysimultaneously buying one security and sell another at a suitablespread. Swap window 106 is similar to spread window 92 with the “Swapfor” function selected in box 98 to display a swap entry box 108. In thecase shown, the trader is buying 25 Mar 6⅞ and selling 25 2 yr“on-the-run” notes at 10 spread. The system executes both transactions.

FIG. 7 provides a schematic illustration of one possible implementationand use of the bond trading program and system of the invention. Bondtrading system 120 comprises a bond trading program according to theinvention as described herein implemented on a suitable computer in asubject bond trader's office. The computer may, for example, be astate-of-the-art personal computer, such as, in early 2001, a DELLOPTIPLEX (trademark, Dell Computer Corporation) GX200 system with an 866MHz PENTIUM III (trademark, Intel Corp.) processor, 256 MB RDRAM and a20 GB hard drive. Some features of the implementation shown are similarto the disclosure of my U.S. Pat. No. 5,915,209 from which furtherdetail may be obtained.

Bidding-and-offering-traders 122 communicate bids and offers at variouslevels, box 124 via data lines 126, for viewing by the subject trader.Acceptances 128 and buy-and-sell tickets 130 can be returned tobidding-and-offering traders 122 also over data lines 126.

The subject trader 120 can also communicate with clients 132, who mayalso be traders, over data lines 126 for the receipt of orders to buy orsell security lots, for transmission of bid/offer forms 134, ofcompleted forms 136 requesting transactions on bids or offers receivedon the client's behalf by the subject trader, and “bought from” and“sold to” tickets 138. If desired, bid/offer forms 134 can betransmitted via an Internet service 140 or fax 142.

Formal particulars of securities traded, including CUSIP (trademark)numbers can be obtained by bond trading system 120 from a local securitymaster database 144 or a remote reference database 146, as described inmy U.S. Pat. No. 5,915,209.

Data lines 126 may indicate any suitable electronic communication systemincluding a preferred virtual or real private network carried by publiccarriers, preferably with global reach, the Internet, a wide areanetwork, local area network or other suitable system.

Optionally, each of bidding-and-offering traders 122 and clients 132 mayimplement bond trading system 120, with the modules or implementationscommunicating one with another across data lines 126.

An individual trader may play the role of a bidding or offering trader122 for one transaction while becoming a client trader for anothertransaction.

FIG. 7 illustrates how a public auction of a fixed income security lot,for example a United States treasury bill, note or bond may be conductedbetween many parties with all bids and offers being anonymously postedon the system to be viewed by all parties. All participants may see alllevels of interest.

Referring now to FIG. 8, in one example of the use of bond tradingsystem 120, the subject trader receives a customer order, step 150, topurchase a specified quantity of a particular bond. The trader selects alevel-of-interest window 10 for the particular bond and views the fulldepth of market interest in the bond in the system, as shown by thepending bids and offers in level-of-interest window 10, step 152.Utilizing their skill and experience 154, the trader evaluates thedisplayed bids and offers, making judgments as to how best to fulfilltheir client's interest, and decides whether or not become theaggressor, step 155 and take or negotiate with an offer. If the decisionis not to become the aggressor, step 155N, because the trader judgesnone of the pending offers to be acceptable or negotiable, the tradeenters the market on the passive side and posts a new bid, step 156.

Also factored into the trader's decision to become an aggressor or not,step 155, is the prevailing commission protocol, which may require theaggressor to pay the commission and will therefore influence thetrader's judgment of the price levels of current offers.

If the subject trader decides to become the aggressor, step 155Y, thetrader then has the options of lifting or negotiating with one or moreof the pending offers. In step 157, the trader decides whether or not totake the offer. If the offer is taken, step 157Y, the system transactsthe sale, step 158. If the trader decides not to take an existing offeras is, step 157N, but has identified one or more of the pending offersas being of sufficient interest to be negotiable, they highlight theoffer and activate negotiate-with-offer bar 52, to negotiate with theoffering trader, step 159. If the two traders agree a price, step 160Ythe system is so instructed and transacts the sale, step 158. If a pricecannot be agreed and no other offer is judged adequate for negotiation,the subject trader proceeds to post a new bid, step 156.

After posting a new bid, the trader passively awaits a hit, step 162,enabling the trader to get on with other business. Optionally, if a hitis not received within a trader-determined time interval, the bid iswithdrawn, repriced and re-posted to the system, step 164. If necessarysteps 162 and 164 can be repeated. When a hit is received, step 166, thesystem transacts a sale, step 158.

The duration of step 162 may be trader-determined, operating “manually”,i.e. the trader simply intervenes and performs step 164 on his ownschedule, or, more preferably is system-effected. To this end, thesystem can permit the trader to select a time interval, e.g. 15 minutes,30 minutes, 1 hour, two hours, etc after which the system withdraws andre-presents the bid to the trader for repricing. The system can suggesta new price. Alternatively, re-pricing may be automated up to (or downto, in the case of offers) a predetermined limit, on a trader-determinedschedule, whereby the price is system adjusted, without consulting thetrader at regular intervals until the limit is reached or thetransaction is effected.

Orders to sell can be effected by processing offers in a corollarymanner.

Referring now to the program screen shown in FIG. 9 another embodimentof bond trading program according to the invention provides the traderthe ability to choose among different trade procedures including themethods of the invention described herein and the novel auctionprocesses described in my U.S. Pat. No. 5,915,209. The screen shown is amulti-purpose bid/offer entry form which comprises multiple drop-downmenus 170-174 enabling the trader to choose different system proceduresincluding the bonds to display, menu 170, the type of lots to displaymenu 172 and a menu of sort keys, menu 174 for listing live orders thetrader has in the system so that the user may manage and monitor theirexposure in the market place. The system enables the trader to check thelevel of bid.

As may be seen, the trader can not only prepare, and using other systemfunctionality distribute, bid and offering wanted lots for conductingprivate auctions, but can also prepare offerings lots and bids (notshown) for public posting for transaction or negotiation, as describedherein. After the auction or other transaction is concluded, the statusfield displays whether or not the lot traded, was priced to market waspriced to the high bidder or was withdrawn.

The invention makes possible a variety of novel optional features toassist a securities trader which derive from or can be associated withthe convenient display to the trader, in transactable form, of multiplelevels of interest in a security. For example, level-of-interest window10 can include dynamic price and volume indices conveniently displayingprice movement in unit time and/or volume transacted in unit time forthe security shown. A price volatility index could also be displayedindicating price change per unit volume transacted. Such indices wouldpreferably be calculated upon and immediately updated fromsystem-completed transactions. Corresponding statistical indices couldalso be system-calculated and displayed to track the prices and volumesof bids and offers posted to the system. Equivalent dynamic indicescould be provided for a group of securities regarded as fungible i.e.having some degree of interchangeability: if one is not available at anacceptable price, then the other will probably be acceptable to theclient.

The present invention is particularly suitable for application in thefinancial industry providing marketable or licensable systems fortrading fixed interest securities including bonds. Systems and softwarereferenced herein include, either explicitly or implicitly, softwareimplemented on computers or other appropriate hardware, including suchother intelligent data processing devices having a processor, datastorage means and the ability to support an operating system, with orwithout user interfaces, for example, file servers, as may be useful inachieving the objectives of this invention.

Suitable developer tools for creating the software programs disclosedherein are well known to those skilled in the art and include forexample MICROSOFT VISUAL FOXPRO 6.0™ database development system.

Software components and applications embodying the invention can bedistributed in electronic bit storage on magnetic, optical, bubble orother media, and optionally in transportable form to be interactive withan electronic reading device, for example, on computer or opticaldiskettes, or may be distributed by downloading over wired or wirelessnetworks, including the Internet, derivatives, modifications andoffspring of the Internet, for storage by the recipient on such media.

It will further be appreciated that such media-stored softwareconstitutes an electronic customizing device which can interact with amagnetically or optically cooperative computer-based input deviceenabling the computer to be customized as a special purpose computer,according to the contents of the software.

For the convenience of the reader, the above description has focused ona representative sample of all possible embodiments, a sample thatteaches the principles of the invention and conveys the best modecontemplated for carrying it out. Throughout this application and itsassociated file history, when the term “invention” is used, it refers tothe entire collection of ideas and principles described; in contrast,the formal definition of the exclusive protected property right is setforth in the claims, which exclusively control. The description has notattempted to exhaustively enumerate all possible variations. Otherundescribed variations or modifications may be possible. Where multiplealternative embodiments are described, in many cases it will be possibleto combine elements of different embodiments, or to combine elements ofthe embodiments described here with other modifications or variationsthat are not expressly described. In many cases, one feature or group offeatures may be used separately from the entire apparatus or methodsdescribed. Many of those undescribed variations, modifications andvariations are within the literal scope of the following claims, andothers are equivalent.

1. An electronic trading system comprising: a computing deviceprogrammed to receive a plurality of bids and offers for a security; thecomputing device being programmed to present an interface to a usercomputer for trading of the security by a user: the interface presentingto the user computer for trading a plurality of bids for the security,at least one of the bids having a best bid price, and other bids havingprices off-best bid prices lower than the best bid price; and theinterface presenting to the user computer for trading a plurality ofoffers for the security, at least one of the offers having a best offerprice, and other offers having off-best offer prices higher than thebest offer price; the interface programmed to receive from the usercomputer responsive hits of at least some off-best bids and takes of atleast some off-best offers; the computing device being programmed toreceive from the user computer a selection of at least one off-best bidor off-best offer, and instructions to execute the selected off-best bidor off-best offer; and the computing device being programmed to executethe selected off-best bid or off-best offer at, respectively, a priceworse than the best bid or best offer.
 2. The system of claim 1 whereinthe security to be traded is a fixed income security.
 3. The system ofclaim 2 wherein: the computing device is programmed to present to theuser computer a par value of each bid or offer adjacent the bid or offerprice.
 4. The system of claim 2 wherein: the security to be traded is aUnited States treasury bill, note or bond, a municipal bond or acorporate bond.
 5. The system of claim 1, wherein: the computing deviceis programmed to permit the user to select two or more of the off-bestdisplayed bids or two or more of the off-best displayed offers, and toexecute the selected off-best bids or offers simultaneously.
 6. Thesystem of claim 5, wherein: the two or more selected off-best bids orselected offers are at different price levels.
 7. The system of claim 6,wherein: the interface is designed to permit the user to select multipleof the displayed bids or offers simultaneously.
 8. The system of claim6, wherein: the program is designed to execute the two selected off-bestoffers simultaneously.
 9. The system of claim 6, wherein: the program isdesigned to execute the two selected offers in a sequence based on theprices of the offers.
 10. The system of claim 9, wherein: the program isdesigned to execute the two selected offers in an ascending-pricesequence.
 11. The system of claim 6, the program being further designedto cause the system to: receive a selection from the user of a third ofthe displayed offers; determine that a fourth offer has been receivedafter receiving the selection from the user of the third offer, thefourth offer having a price better than the price of the third offer;and cause a dialog window to be displayed at the user computer station,the dialog window comprising information regarding the fourth offer andat least one element for the user to accept and to ignore the fourthoffer.
 12. The system of claim 1, in which the program is furtherdesigned to cause the system to: execute orders pending at prices at orbetter than the selected off-best bid or off-best offer in combinationwith the selected bid or offer.
 13. The system of claim 17, in which theprogram is further designed to cause the system to: execute the best bidor best offer as part of the combination.
 14. The system of claim 1, inwhich the program is further designed to cause the system to:
 15. Amethod comprising the steps of: at a user computer of an electronictrading system, receiving network electronic messages that makeavailable for trading at the user computer: a plurality of bids for thesecurity, at least one of the bids having a best bid price, and otherbids having prices off-best bid prices lower than the best bid price;and a plurality of offers for the security, at least one of the offershaving a best offer price, and other offers having off-best offer priceshigher than the best offer price; the received network electronicmessages designed to enable the user computer to indicate selection forexecution of a received bid and/or a received offer at a price off theprice of the best displayed bid and/or best displayed offer; based onselection of an off-best bid or off-best offer, transmitting from theuser computer at least one network electronic message indicating aninstruction to execute against at least one of the off-best bids oroff-best offers at a price worse than the best displayed bid or bestdisplayed offer.
 16. The method of claim 15 wherein: the user computeris designed to display the received bids and offers on a display screenin side-by-side vertical lists.
 17. The method of claim 35 wherein: thereceived electronic messages make available for trading at the usercomputer substantially all bids and offers for the security known to theelectronic trading system.
 18. The method of claim 15, wherein: theelectronic trading system is programmed to permit the user computer toindicate selection of two or more of the off-best bids or two or more ofthe off-best offers, and to execute the selected off-best bids or offerssimultaneously.
 19. The method of claim 15, wherein: the electronictrading system is programmed to permit the user to select two or more ofthe off-best displayed bids or two or more of the off-best displayedoffers, and to execute the two selected offers in a sequence based onthe prices of the offers.
 20. The method of claim 15, wherein: theelectronic trading system is programmed to permit to cause the system toexecute orders pending at prices at or better than the selected off-bestbid or off-best offer in combination with the selected bid or offer. 21.The method of claim 20, in which the program is further designed tocause the system to: execute the best bid or best offer as part of thecombination.